For Immediate Release                                                                    March 25, 2004

For more information contact Daniel Squires     810-985-3577     drs@vhpinc.com

House and Senate Pass Bills to End Utility Customer Protections

Utility Customers had better make their voices heard in Lansing soon or else face the possibility of higher electric rates.   Both Senate Bill 612 (SB612), passed in the Senate last fall and the House version SB612 (H-1) passed 3/25/04, would allow electric utilities to avoid Public Service Commission rules that help protect utility customers from undeserved rate increases. 

The rules are part of a Code of Conduct that prevents electric utilities from shifting costs of their appliance repair programs to utility customers in the form of higher future electric rates.  This is a benefit of rules that are “intended to promote fair competition by establishing measures to prevent cross-subsidization, information sharing and preferential treatment between the unregulated and regulated operations of electric utilities”.  

Consumers Energy has said it will discontinue its Appliance Service Plan because it will cost too much to operate under the Code of Conduct.  Competing heating contractors scoff at this. 

“For 20 years we have been saying the appliance repair prices are subsidized by utility customers.  Finally Consumers has to compete fairly and they admit the revenue won’t cover all the costs.  This proves we’ve been right all along!” says Cliff McCourt, a heating contractor from Novi.

“Utilities have the same option of every business faced with higher costs – cut costs or raise price.  Instead, they want the legislature to turn back the clock at the expense of utility customers and fair competition.”

McCourt says over the years subsidies let utilities compete at below market prices and obtain a large market share.  “Now Consumers essentially admits it needs an unfair competitive edge to compete.  The Code of Conduct is accomplishing its stated purpose – why would the legislature change it?”

Daniel Squires, spokesman for the Michigan Alliance for Fair Competition says that Consumers Energy has gone all out, spending hundreds of thousands of dollars to repeal the reforms passed in 2000 that are yet to be fully implemented. 

“For the last 3 years Consumers has done everything it can to undo the utility customer safeguards only to be thwarted at the Public Service Commission and in the Courts. In its latest effort it has successfully motivated their appliance plan customer base – the people who benefit from the subsidies – to appeal to the legislature.”

Squires says term limits have replaced most of the legislators who saw the need for the reforms with a new group unfamiliar with the complex issue.  “Consumers took advantage of term-limits and has successfully kept legislators attention off the protections that will be sacrificed and on the vocal minority who benefit if the program remains as is.”

The utility and supporters of the legislation deny that SB612 will allow cross-subsidies.  Squires responds “They have all kinds of explanations and reasons, but the proof is in the pudding:  Consumers admits that its current appliance repair service revenues do not cover its costs under the new rules.  If SB612 solves its problem, what other conclusion is there?  If it walks like a duck, and quacks like a duck, it’s a duck.”